|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Few healthcare surprises in Biden’s enormous FY22 budget
President Biden released his budget proposal for fiscal year 2022 on Friday, clocking in at a whopping $6T of federal spending on programs aimed at making sweeping investments in infrastructure, education, and social services, and banking on hefty government borrowing at low interest rates to fuel a major overhaul of the American economy. The proposal includes big increases in discretionary spending, including raising funding for the Department of Health and Human Services (HHS) by 23.4 percent, to $133.7B, the largest increase in almost two decades. The budget bolsters funding for a variety of healthcare programs, but notably includes specifics on only two major increases in mandatory healthcare spending: making permanent the temporary subsidy increases for individual coverage that are part of the American Rescue Plan Act ($163B); and expanding home- and community-based services in Medicaid ($400B). Both of those proposals were announced earlier this year as part of Biden’s twin recovery packages for infrastructure and social programs.
Notably absent, apart from statements of general support, are any details for implementing a “public option” health plan, or for lowering the Medicare eligibility age to 60—two healthcare proposals that figured prominently in Biden’s campaign platform. Nor are there specifics on lowering spending on prescription drugs, another key area of interest among lawmakers. Like all presidential budgets, the Biden document is simply a statement of priorities, providing a starting point for negotiations in Congress. But the relatively narrow scope of the healthcare proposals—as hefty as their price tags are—indicates that the White House is likely not willing to throw down over a major overhaul of coverage, at least while Congress is so closely divided. While there are bills afloat in both the House and Senate to more aggressively expand coverage, we’d expect this summer’s legislative horse-trading to result in something resembling what’s in the President’s budget—and not much more. “Medicare at 60” and a national public option are likely on hold, at least until after the 2022 midterm elections.
Deepening the role of Big Tech in analyzing clinical data
HCA Healthcare, the nation’s largest for-profit hospital chain, which operates 185 hospitals and more than 2,000 care sites across 20 states, announced a landmark deal with search giant Google this week, aimed at extracting and analyzing data from more than 32M annual patient encounters. The multiyear partnership will involve data scientists from both companies working together to develop care algorithms and clinical alerts to improve outcomes and efficiency. Data from HCA’s electronic health records will be integrated with Google’s cloud computing service, and the companies have pledged to adhere to strict limitations to protect individual patient privacy—a key concern raised by regulators after Google announced a similar partnership with another national health system, Ascension, at the end of 2019. Despite those assurances, some experts pointed to this week’s announcement as further evidence that existing privacy protections are insufficient in the face of the deepening relationships between tech companies, like Google and Microsoft, and healthcare providers, who manage the sensitive health information of millions of patients.
We’d agree—we’re overdue for a major rethink of how patient privacy is handled. The healthcare industry spent much of the last decade “wiring” the health system, converting from paper records to electronic ones, and building vast storehouses of clinical data along the way. We’ve now reached a new phase, and the primary task ahead is to harness all of that data to actually improve care. That will require extensive data sharing, such as a recently announced initiative among several major health systems, and will also entail tapping the expertise of “big data” companies from beyond healthcare—the very same companies whose business practices have sometimes raised privacy concerns in the broader social context. But health information is different—more personal and more sensitive—than data about shopping preferences and viewing habits, requiring more rigorous regulation. As more big data deals are inked in healthcare, the question of patient privacy will become increasingly pressing.
Telemedicine provider Babylon Health buys 700-doctor group
Last week it was reported that London, UK-based telehealth provider Babylon Health has acquired Meritage Medical Network, a 700-physician practice based in northern California, along with that group’s managed care contracts, laboratory, ancillary and urgent care assets. Added to the company’s acquisition of a large Fresno-based physician group late last year, Babylon now employs nearly 2,000 doctors in California. Babylon’s CEO, Dr. Ali Parsa, a healthcare entrepreneur and “app-maker”, notes that “in less than a year, Babylon has gone from being unknown in the US to today managing the total cost of care for up to 90,000 lives.” Babylon has grown quickly across the UK and Canada, but not without controversy. A contract with Britain’s National Health Service (NHS) to provide triage and diagnosis services gave Babylon its first big break, although some doctors questioned the accuracy of its “chatbot” diagnostic engine, alleging that 10 to 15 percent of its recommendations were “flat out wrong”. As Babylon now expands in the US, it will bear watching to see how the company’s AI-driven technology platform will integrate into patient access, care management and risk contracting. How doctors will figure into Babylon’s business model is also an open question: will the company be a long-term operator of physician practices, or ultimately look to doctors to support further expansion of its virtual care services? Regardless, Babylon’s medical group deals represent the emergence of a new class of competitor for physician talent—expect other technology companies to join payers, retailers, and private equity investors on the list of well-funded organizations looking to pay top dollar in the race to acquire and roll up physician practices.